Overview of IT Park resident companies: economic impact and their role in job creation and export expansion

As of the end of November 2023, IT Park Uzbekistan has emerged as a thriving hub for technology and innovation, hosting more than 1,600 resident companies. This article delves into the demographic composition, economic contributions, and growth strategies of these residents, shedding light on the pivotal role played by IT Park in transforming Uzbekistan into a prominent outsourcing destination and a key player in the global IT landscape.

Overview

As of the end of the first 11 months of 2023, the number of residents in IT Park has reached 1,598, with 411 companies having foreign capital participation from various countries, including the USA, UK, Germany, Georgia, Korea, and various CIS nations.

Notably, the number of export-oriented companies in IT Park has significantly increased to 550, comprising 328 in IT services and 222 in BPO services, during the first 11 months of 2023. This marks a 1.9-fold surge compared to the same period last year. The total export volume for the first 11 months of 2023 has soared to $280 million, which is nearly double the total for the entire year of 2022 ($140.9 million).

The resident status of IT Park confers substantial tax incentives. Non-residents pay corporate tax ranging from 4-15%, while residents are exempt. Social tax for non-residents is 12%, whereas for residents, it is 0%. Income tax for non-residents is 12%, and for residents, it is 7.5%. Non-residents are subject to VAT on imported services, whereas residents are not.

Large companies, such as East Games, iTransition, Epam Systems, Vention, AMC Bridge, Dyninno TAS International, Gcore and others, have become residents of IT Park Uzbekistan, attracted by these favorable conditions.

Global expansion

IT Park residents are significantly contributing to Uzbekistan's economy by exporting their services globally. Both the geography and structure of IT service exports are undergoing noteworthy changes.

In 2022, 78% of IT service exports were directed to the United States, but the current distribution is as follows:

• North America: 43%
• EU and the United Kingdom: 37%
• Singapore: 6%
• Gulf Countries: 4%
• Other countries: 10%

Regarding service distribution, in 2022, over half of IT service exports were attributed to BPO. The current distribution is as follows:

• Software Development: 42%
• BPO: 20%
• Licensing: 15%
• Technical Support and Enhancement: 14%
• Game Development: 9%

This diversification highlights the global reach and competitiveness of IT Park residents, enabling the IT sector to avoid dependency on a single country or direction. The prominence of software development as the primary sector indicates the emergence of a larger pool of qualified professionals in the country. Furthermore, software development opens up substantial opportunities and potential, considering the global development market is valued in the hundreds of billions of dollars.

Job creation and employment

One of the significant impacts of IT Park on the Uzbek economy is the creation of employment opportunities. By the end of the 11th month in 2023, resident companies employed 6,125 people, showcasing a remarkable 34% increase compared to the end of 2022. The cumulative number of employed professionals has now surpassed 24,125, emphasizing the sector's pivotal role in fostering job growth and skill development.

Growth initiatives

IT Park's commitment to fostering growth is evident through the launch of new programs in 2023. Initiatives such as One Stop Shop, Zero Risk, Local2Global, and Global Excellence aim to attract new IT companies to Uzbekistan and support existing residents in accessing new markets. These programs mitigate initial risks, provide collaboration opportunities with global consultants, and enhance the country's brand as an emerging outsourcing market.

Resident companies stand to benefit from compensation for export consulting services, sponsored trips to Uzbekistan for clients, and export mentoring programs as part of these initiatives.

Conclusion

IT Park Uzbekistan has positioned itself as a catalyst for technological advancement, economic growth, and global recognition. The surge in resident companies, exponential export growth, job creation, and strategic programs underscore the success of IT Park in transforming Uzbekistan into a regional IT hub and a dynamic player in the global IT landscape. As the world becomes increasingly interconnected, the prospects for IT Park and its residents are promising, contributing not only to the development of the IT sector but also to the overall economic prosperity of Uzbekistan